Mideast carriers top global traffic growth

Geneva, April 3, 2014

Middle East carriers had the strongest year-over-year traffic growth in February at 13.4 per cent as airlines continue to benefit from the strength of regional economies and solid growth in business-related premium travel.

The Gulf nations in particular are enjoying acceleration in non-oil sectors of their economies, further supporting strong demand for air travel, according to the International Air Transport Association (Iata) which announced global passenger traffic results for February.

Regional carriers saw a 12.5 per cent increase in capacity, while the load factor climbed 0.6 percentage points to 78.9 per cent.

Globally, airlines saw a demand growth of 5.4 per cent in February compared to February 2013. Although this represented a slowdown compared to the January traffic increase of 8.2 per cent, cumulative traffic growth for the first two months of 2014 was 6.9 per cent, which compares favorably with the 5.2 per cent overall growth achieved in 2013.

“People are flying. Strong demand is consistent with the pick-up in global economic growth, particularly in advanced economies.” said Tony Tyler, Iata’s director general and CEO.

February international passenger traffic rose 5.5 per cent compared to the year-ago period. Capacity rose 5.8 per cent and load factor slipped 0.2 percentage points to 76.8 per cent. All regions recorded year-over-year increases in demand.

African airlines experienced the slowest demand growth, up 0.1 per cent compared to February 2013. With capacity up 4.1 per cent, load factor fell 2.6 percentage points to 63.7 per cent, by far the lowest among the regions.

The weakness over recent months in part could reflect adverse economic developments in some parts of the continent, with the slowdown in the major economy of South Africa, as well as growing competition from airlines based outside the region.

European carriers’ international traffic climbed 5.8 per cent in February compared to the year-ago period, the strongest growth among the three largest regions.

Asia Pacific carriers recorded an increase of 4.0 per cent compared to February 2013. While this was down compared to January traffic growth (8.3 per cent), in part this was owing to the timing of the Lunar New Year, which took place in January, a month earlier than in 2013.

North American airlines saw demand rise 2.0 per cent in February over a year ago, a slowdown on the January growth rate (3.7 per cent), while Latin American airlines’ traffic rose 4.2 per cent.

“The strong demand for air travel at a time of rising business and consumer confidence is indicative of the symbiotic relationship between aviation and economic growth. The connectivity provided by aviation both enables and sustains trade and development, while economic activity creates demand for aviation. Governments that treat aviation as if it were a luxury item--or a necessary evil--are depriving their populations of a key engine of growth and job creation,” said Tyler.

Last month, the UK government recognized the principle that its onerous Air Passenger Duty (APD) was hurting the UK’s economic prospects—particularly its ties with emerging economies such as China, India and Brazil.

From next April, the highest bands will be eliminated. This followed reductions agreed last year to address the economic damage that APD was doing to Northern Ireland. But despite these adjustments, planned annual inflation-related increases continue.

“This latest effort is half-hearted at best. Instead of immediately addressing the economic damage of this misguided tax, the government will eliminate the highest bands from next year,” said Tyler.

“The APD is a drag on the UK economy that far outweighs even the billions of pounds that it siphons from the pockets of travelers. The government’s tinkering pays little more than lip service to this fact. It’s time for decisive action. Taxing a necessity like connectivity as if it were a social indulgence hurts the economy. A comprehensive review is needed,” said Tyler. – TradeArabia News Service